Livni met Fatah leaders Yasser Abed Rabbo and Salam Fayyad earlier this week and outlined her plan to negotiate with moderate Palestinians and shape the future of the peace process. She advocates an Israeli pullout from the West Bank east of the separation fence and the establishment of a Palestinian state - which would also be the solution to the Palestinian refugee problem - in the evacuated area.

Livni did not brief Olmert about her meeting with the Palestinians, and it is not clear whether he heard about it from intelligence sources.

But despite his anger, Olmert decided not to confront Livni, so as to avoid a crisis in their relations like the one that erupted between himself and Defense Minister Amir Peretz after the latter's telephone conversation with Palestinian Authority Chairman Mahmoud Abbas.

Olmert's aides said that Livni had met unimportant figures.

Livni said that she believes it is her duty to examine ideas about the peace process with Palestinian and other Arab leaders, in order to know "what there is to talk about."

She refrained from broaching the Jerusalem issue or suggesting discussions on a final-status arrangement.

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